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Prudential Plc to combine UK businesses; H1 profit soars YOY

Prudential Plc reported a 119% year-over-year increase in profit for the six months ended June 30 as it announced its intention to combine its U.K. businesses.

The British insurer said it intends to combine M&G Investment Management Ltd. and Prudential UK & Europe to form M&G Prudential, a savings and investments provider with £332 billion of AUM as of June-end.

John Foley, CEO of Prudential UK & Europe, will lead M&G Prudential, with M&G Investment CEO Anne Richards and Prudential UK & Europe's CEO of insurance, Clare Bousfield, to serve as deputy CEOs. Foley and Richards will remain members of Prudential's board.

More details about the new combined entity will be presented at Prudential's investor conference in London on Nov. 16.

Meanwhile, Prudential reported first-half profit attributable to equity holders of the company of £1.51 billion under International Financial Reporting Standards, up from £687 million a year ago. EPS for the period was 58.6 pence, compared to the year-ago 26.8 pence.

Earned premiums, net of reinsurance, rose on a yearly basis to £21.16 billion from £17.39 billion. The investment return also increased year over year, to £20.63 billion from £17.06 billion.

Benefits and claims and movement in unallocated surplus of with-profits funds, net of reinsurance, rose to £35.44 billion in the half from £30.94 billion a year earlier. Acquisition costs and other expenditure amounted to £5.33 billion, up from the year-ago £3.56 billion, and total charges, net of reinsurance, totaled £40.92 billion, compared to £34.67 billion in the first half of 2016.

Pretax profit from the group's Asia operations was £953 million, compared to the year-ago £728 million, on an actual exchange rate basis. The U.S. operations contributed £1.08 billion in pretax profit, up 22% year over year, while the U.K. operations booked first-half pretax profit of £751 million, up from £730 million a year earlier.

The group noted that it completed in May the sale of its life insurance unit in South Korea. Operating profit based on longer-term investment returns for the first half excludes the results attributable to the sold Korea life business, the company said.

The group reported a Solvency II surplus of £12.9 billion as of June 30, equivalent to a solvency ratio of 202%. At the end of 2016, the group Solvency II capital surplus was £12.5 billion.

The company also announced an interim dividend of 14.50 pence per ordinary share for the first half, up from 12.93 pence per share a year earlier.